Slowest GDP growth in 4 years at 5.6%

Slowest GDP growth in 4 years at 5.6%


UnionBank Publication

UnionBank Publication

16 May 2019, 11:12 — 4 min read

The first quarter GDP was at 5.6%, lower than the 6.1% expected by market analysts and economists.  It is softer compared to the 6.5% growth recorded for the same period last year.

According to the Philippine Statistics Authority (PSA), government spending (government consumption in Figure 1) expanded only by 7.4% compared to 13.6% from January-March 2018.

Meanwhile, public construction declined by 8.6% due to the delayed of 2019 national government budget. President Rodrigo Duterte only signed the 2019 budget into law last April 25.  Because of the late budget passage, it cost the government about an estimated Php 1 billion per day spending for the first quarter.

April Inflation

However, household spending (or private consumption in Figure 1) grew to 6.3% from 5.6% previously. This was largely due to slower inflation so far this year resulting to improving consumer spending. Exports dragged growth with a 5.8% decline from 10.3% last year; whereas, imports were likewise weaker at 8.3% compared to 11.3% last January-March 2018.

On the supply-side, services had the fastest growth at 7.0%, coming from 6.8% previously, and industry declined to 4.4% versus 6.6% the previous quarter. Agriculture, meanwhile, slightly grew at 0.8% year-on-year.

April Inflation


To reach the government’s target of 6.0-7.0% economic growth this 2019, the economy should grow at least by 6.1% quarterly from here onwards, according to economic managers. Furthermore, the growth impact of the delayed 2019 national budget is set to even spillover into the second quarter of this year, putting UnionBank’s Economics Research Unit’s (ERU) 2019 growth forecast to further rethinking.

ERU now thinks that 2019 GDP economic growth will settle at 6.1%, previously 6.3%, and 6.6% in 2020. Inflation view is still the same at 3.2% this 2019 and 3.0% for 2020. Even with the BSP cutting interest rates recently, all forecasts remain the same.

Article by Ruben Carlo O. Asuncion

Disclaimer: While this document is based on information obtained from sources we believe to be reliable, we do not make any representations as to its accuracy, completeness, correctness, timeliness or use for any particular purpose. Opinions and statements expressed here are those of their author(s) as of the date of this report and not of Union Bank of the Philippines (UBP). The opinions and statements provided in this document are subject to change without prior notice. Any recommendation contained in this document does not have regard to the reader’s particular investment objectives, financial situation and any other specific needs. This document is for informational purposes only and UBP is not soliciting any action based on it. Nothing here shall to any extent substitute for the independent investigations and the technical and business judgment of the reader. Your use of this document and any of its contents is at your own risk and UBP does not accept any liability for the results of any action or decision taken on the basis of or reliance on this document or any of its contents.

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